New Member States set for rapid broadband growth

September 10, 2004

Brussels, 08 Sep 2004

A new analysis of broadband penetration rates in the EU has concluded that while the availability of high-speed Internet services in the new Member States currently lags far behind that of the older EU countries, the region is already experiencing a period of rapid broadband growth.

At the end of 2003, broadband was only available in 1.9 per cent of households in the new Member States, compared with 12 per cent in the EU15. However, a report published by Yankee, a US based communications research consultancy, suggests that broadband penetration in major urban centres in the new EU countries could match that in the rest of the EU by 2008.

The rapid growth of broadband currently being witnessed in the new Member States is being driven by several factors, according to Yankee. The report cites: 'a relatively more affluent, urban, techno-literate middle class; strong competition in some countries between telcos and cable TV companies; and strong political support for Internet usage in some countries,' and concludes that: 'As a result, we expect to see strong overall growth in the new countries during the next five years.'

On a country-by-country basis, however, the availability of broadband in the new Member States varies widely. According to Yankee, Internet penetration is highest in Poland, Hungary and the Czech Republic - the three largest nations - while Slovakia has been the slowest to develop its capacities, with broadband having only recently become available there. Latvia, Lithuania, Malta and Cyprus all have average penetration rates, according to the report.

In terms of the technologies used to access broadband, the analysis finds an interesting distinction between the old and new EU countries. 'Cable TV is a surprisingly important Internet access methodology in some of [the new EU] countries,' the report states, noting that in the Czech Republic cable Internet is well ahead of DSL (digital subscriber line).

The report goes on to make a number of market predictions for broadband development in the new Member States. Yankee expects penetration rates in Poland, Hungary and the Czech Republic to rise from two per cent in 2003 to around 17 per cent by the end of 2008. However, the company warns that 'universal' broadband could take a lot longer unless certain key impediments are removed: 'The cost of suitable PCs is a major barrier among the lower income groups, and terminal innovations, together with pay-as-you-go broadband, may be the only way to take penetration beyond the 20 per cent range.'

Therefore, the report concludes by making a number of recommendations for vendors and service providers operating in the new Member States. Given the high cost of PCs, it suggests a flexible approach to alternative methods of Internet access, including TV and stripped down terminals. Tapping into EU Structural Funds to promote the information society in economically disadvantaged areas could also widen broadband access, and finally, offering pay-as-you-go access could help to persuade those customers put off by the prospect of high monthly fees.

To access the report, please consult the following web address:
http://www.yankeegroup.com/public/home/d aily_viewpoint.jsp?ID=11808

CORDIS RTD-NEWS / © European Communities
Item source: http:///dbs.cordis.lu/cgi-bin/srchidadb?CALLER=NHP_EN_NEW...

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